Silex shelves major solar power plant on RET uncertainty

The company behind one of Australia's largest solar power plants has abandoned the project, in part due to uncertainty over the Renewable Energy Target.

There is speculation in Canberra that the Prime Minister has called for the Government's review of the RET to include not just a scaling back but a complete removal of the target.

The 100-megawatt Silex Mildura solar power station would have provided electricity to 40,000 homes, but after years of work the project has been shelved.

"There's a number of factors, including low wholesale electricity prices and the uncertainty surrounding the Renewable Energy Target. They're the two main factors," said Michael Goldsworthy, the CEO of Silex Systems.

He says the RET had offered an attractive price for renewable energy, but this advantage had been eroded due to uncertainty over the future of the policy.

"There's not as much pressure on the market to have renewable energy in their portfolio now simply because the RET is at least going to be wound back and possibly abolished," he added.

The Renewable Energy Target mandates that 20 per cent of all electricity would come from renewable sources by 2020.

That figure was set at 41,000 gigawatt hours based on earlier power consumption figures, but it is currently being reviewed by businessman Dick Warburton.

The World Today has been told the review will definitely be delivered this month.

"We're reading it will be at least scaled back, but there's uncertainty," Mr Goldsworthy said.

"The one sure thing is there is a lot of uncertainty and that is not a good thing for renewables."

RET rewind to profit fossil fuel powered plants: report

A report released on Monday by several environmental groups shows that, if the RET is wound back from its current target or cut altogether, extra profits worth $9 billion would go directly to power companies that burn coal and $2 billion to those companies that burn gas.

The modelling was done by consultancy firm Jacobs.

"What we really wanted to look at was who really benefits, and what we find is that, if you wind back the Renewable Energy Target, coal generation gets increased share and those big companies, of course, therefore get more profit," said Erwin Jackson from the Climate Institute.

"That's because renewables, once they're constructed, they're ... essentially free to operate; the fuel that they use - sun or wind - is free compared to the fossil fuel generators which have to pay for coal and gas," explained Dugald Murray, the chief economist with the Australian Conservation Foundation.

"That's what we've really highlighted in the report today - that if you do wind back renewable energy investment, consumers don't benefit, the country doesn't benefit," added Mr Jackson.

"Who really benefits is Origin Energy, EnergyAustralia and AGL."

RET not working: power generators

As electricity consumption has been falling in Australia in recent years, those companies are now arguing the RET should represent 20 per cent as it will actually stand in 2020.

That may be closer to 27,000 gigawatt hours, rather than 41,000.

Matthew Warren, the chief executive of the Energy Supply Association which speaks on behalf of electricity companies, takes issue with the Jacobs modelling.

"There's lots of modelling from different voices in this that all say slightly different things, and I think it's wrong to paint this as a contest between renewable energy and conventional energy," he said.

"The three major retailers, for example, that you've mentioned have backed, I think, more than half of the large scale renewable projects in Australia.

"So they're interested in investing in renewables as much as they are in the rest of their energy portfolio and managing climate risk through the 21st Century."

Mr Warren also disputes the characterisation of power companies as highly profitable money generators.

"This premise somehow that there's lots of money to be made in conventional energy generation, I'm not sure where that comes from," he said.

"You only have to look at the prices being paid for some of the generators being sold by governments in New South Wales and Queensland to show that the values have eroded significantly. This is not true.

"And this really is the problem we face in the 21st Century in Australia is the transformation of the energy sector, and our concern with the RET, as it's currently set now, is that it simply doesn't work - that we're not seeing investment in renewables behind it.

"We've seen substantial changes in the conditions that the RET is operating in - falling demand, a removal of the carbon price - and that just means that we don't see investment falling in behind the RET."

Australia risks falling behind: Climate Institute

However, Mr Warren had this response when questioned over the role uncertainty around the RET was playing in its recent apparent ineffectiveness in generating renewables investment.

"What we're saying is that the conditions operating in the market are almost uninvestable and that simply leaving the RET alone is not going to fix the fundamental problem of how we finance and build the transformation in the 21st Century," he said.

Erwin Jackson says Australia risks getting left way behind the rest of the world if it abolishes the RET.

"Over 140 countries around the world have got targets to expand renewable energy because they know it's in their own economic self interest to do so," he said.

"We certainly shouldn't be taking a backwards step and dumping investment in clean energy while the rest of the world is moving in the opposite direction."